Benefits and Risks of Investing in Brazil

The best way to describe Brazilian economic growth is by their own Phrase ‘E boa Pra caramba’. Majority of the Brazilian elderly class of people have witnessed great economic turmoil and even survived dictatorship from the military and has still has managed to grow its gross domestic products from $15 billion in 1960 until now they are the seventh largest economy in the world which by 2011 was stood at $2 trillion.

Macroeconomic stability in Brazil has improved since 2003. It has built up economic reserves and reduced its borrowing by changing it to real – denominated and domestic securities. In 2008 the country’s debt was awarded the status of investment grade by two credit agencies. In 2010, the after some moderation the country returned to the positive growth and continues to attract investors up to date according to Igor Cornelsen.

Benefits and Risks of Investing in Brazil

Just like many emerging markets, investing in Brazil involves both risks and benefits. The rate at which the country’s economy is growing may make it give good returns but political instability and dpedence on exports make it riskier than the markets that are well developed.

These benefits include:

Strong economic growth rate. The growth of Brazil’s economy has benefited from China’s strong demand and other upcoming markets in need of their natural resources. Its independence on its own oil has also helped it evade domestic growth problems that are associated with high oil prices.

Relatively stable economy. In the, Brazil undertook steps towards Fiscal stabilization and liberalization of its economy. Brazil’s Economy has become a top – tier that has a growing technological sector and inward focus that is supposed to produce a growth rate that is sustainable over a long period of time.

Rich in natural resources. Brazil is among the leading producer of iron – ore in the world. It is also home to one of the largest offshore oil discoveries for decades now. These factors have helped it to build a strong base from which it has come up with a sophisticated technology sector and growing domestic economy.

The Risks Include

Political instability. Political history of Brazil is somewhat volatile and this has remained so up to date. Matters of corruption involving a number of government officials were arrested for allegedly siphoning government money.

Foreign Dependence. Brazil depends more on exports than other developed countries such as United States. They also rely heavily on external financing and its current account deficit. Any financing from foreign countries always have negative effects on the economy.

Igor Cornelsen is a top Brazilian banker and investment expert who has also talked about important tips to be considered before one decides to invest in Brazil. He very well understands Brazil’s potential that has made it to become a key player in the worlds economics.

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